Retirement Pension Options

An amazing £135 billion of retirement fund fund money is due to mature over the next few years as the BabyBoomers move into retirement. However, thousands of these Pension Investors are  short-changed because they miss out on the best available pension advice.

With your Retirement Pension Options you should consider carefully what decisions you make sooner rather than later and of course remember that your  Pension Options are often fixed in place once the decision is made.

You could start with the Retirement Options Manual which outlines available alternatives for your Pension.

By altering your pension savings into an income you are making one of the most important financial decision you will ever make.  Nearly all  company pensions will provide a Pension income routinely, but those with personal pensions and some types of employer schemes must  turn these funds into an annuity or similar our Best Pension Annuity Rate service will help you find the most suitable product for you.

Retirement isn’t like buying car insurance, where you do it every year and build up expertise. Everyone’s doing it for the first time – and there is no second chance if you get it wrong. Which is why you need to consider your Pension Options.

So what you can you do to improve your situation.

Looking ahead

I suggest you start to look at your plans some 12 months ahead of the big day (retirement). You will need time to consider carefully the options. Over here at the financezone we have produced a guide to your retirement options which is available for download at nominal cost (if you decide take advice from us we will refund you the purchase price in full) however it could save you many thousands of pounds if you wanted to DIY.

The very latest time to consider your Retirement Pension Otions is about 3 months before your retirement date.

Using these deadlines (12 and 3 months) will give you time to gather information, bring together  fund valuations and see how your  personal  pensions will complement State and workplace pensions.

In most cases, those with a personal pension will end up using the fund to buy an annuity from an insurer, exchanging  capital for a guaranteed lifetime income. Our Best Pension Annuity Rate service will help you find the most suitable product for you

But savers must be on the ball, especially those with older pensions that have generous guaranteed annuity rates noting of course these are becoming fewer as years go by. However you must check,

Shop around

Many Pension Investors are not aware they do not have to buy a pension from the company that has managed their money up to retirement. Instead, they can use the open market option to find a better deal with another provider.

Tracking down the best rate can boost your income by as much as half for the rest of your life and remember it is only an Independent Financial Adviser that is able to advise you from all of the providers in the market place and of course provide Impartial Financial Planning Advice.

Usually annuity rates can vary greatly, and often by 10% or more, the actual rate offered depends on many things and often  how keen an insurer is to win new business. There are some other  reasons why some of you should consider shopping around.

‘Enhanced’ annuities pay better rates to those who have a shorter than average life expectancy. You might be eligible for an enhanced rate because you have been a smoker, for medical reasons, or even because of your postcode.

These are all outlined in the Retirement Options Manual which outlines available alternatives for your Pension.

To put it bluntly, if you are likely to die younger than others you could be getting more income from your Pension at retirement.

Smokers, those of you with health problems, even heavy drinkers and if you are living in certain postcode areas could qualify for a better annuity rate.

Consider  the future

An pension bought now may continue for 30 or 40 years, but the income you get is dictated  your personal circumstances at retirement.

One option is a fixed-term annuity. This allows you to secure an income for five or ten years then receive a lump sum back to reassess your options.

These work like this, you health could worsen between age 65 and 75 and you might then qualify for an enhanced annuity rate, changing circumstances  may also help you get a better rate, e.g.  death or divorce means they no longer need to provide for a spouse’s or partner’s income.

There are risks with a temporary annuity, though.  Changes in financial markets mean that annuity rates could tumble. This could mean that when the plan matures, your lump sum is not sufficient to replace your existing income.

Another option might be to invest in an annuity that will increase over time. You can buy an index-linked policy that rises with inflation, or one that rises by a set rate each year, but in both cases the starting income will be lower than a conventional level annuity.

There are also investment-linked annuities where the income will be influenced by how  stock markets increase over the next few decades. But there is the risk that if markets slump, so will your retirement income.

Do your homework

Before you make the final decision you should consider your options carefully and discuss these with your Spouse and Partner, after a review by an Independent Financial Adviser.

Annuities are not the only choice for those retiring. Opting for an unsecured pension (USP) allows savers to take tax-free cash but leave the rest of the fund invested in stock markets. You can then draw an income from this fund, hoping that market growth replaces the capital you have taken.

A USP can run until age 75, appealing to those who want to work part time in retirement, but it is risky and expensive. Advisers say it typically takes a fund of at least £100,000 to make the sums add up. Advice is essential.

And you do not have to put all your eggs in one basket. You could choose to mix two different types of annuity, perhaps blending a fixed and a rising income.

Whatever you finally decide it is important you understand  the decisions made in the lead up to your formal retirement will have an impact for many years. Therefore the lead in time to your final decision is critical.

I have produced a more in depth guide to your Retirement Options which is available for download. There is a small charge for this guide which is full refundable should you decide to take your formal planning advice from ourselves. You can of course contact me here, or call on 0845 226 9106

Richard Smith

http://www.thefinancezone.co.uk

Posted in Best Savings Account Rates, Equitable Life, General Financial News, Investments, News - Updates, Pensions - News | Comments Off

Fund Research | How to pick the top performing funds

Fund research – As you may, or may not be aware, when researching the funds for the database I ignore the latest trends, new funds and “star” managers, and concentrate on analysing the actual performance achieved. So when attempting to pick the top performing funds it is refreshing to find an Investment Adviser that is getting it right.

Trustnet recently published their list of 122 “Alpha” managers, i.e. the managers who add real value to the investment process (list attached). Having checked the top managers on their list against my recommended funds it is nice to know that our clients money has 12 of the top 15 managers looking after it.

Now you can choose to take Investment from anywhere, but before you do ask the right question. My clients have and I can prove it.

Richard Smith

Posted in Abbey Life, Equitable Life, General Financial News, Home Buyers, Important, Investments, NPI News, Pearl Pension, Royal Sun Alliance, Scottish Provident, Windsor Life | Comments Off

With Profits Investment | Investment Adviser | The Finance Zone.co.uk

It is quite amazing to me that the regulator, the Financial Services Authority, has allowed the biggest single sector of the UK investment market to end up in a big mess mess.

When considering With-Profits investments, and finding the correct advice via an Investment Adviser  both as a concept and in reality, should be simple, however is  often completely fudged by providers (Life Assurance Companies).

Despite the obligation for With-Profits providers to publish a PPFM (Principles and Practices of Financial Management) it is still often impossible to uncover all the relevant facts and figures. The PPFM documents themselves are often crammed with impassable terminology and detail and, like With-Profits in general, appear designed to make things as unclear as possible.  It is also interesting to note that many Investment Advisers also still get it very wrong.

The approach of many With-Profits companies with regard to transparency is often nothing short of appalling, and is in direct conflict with the FSA’s “Treating Customers Fairly” initiative.

It is hard to believe that in the modern investment world With-Profits still plays such a large part. It is clear that the concept of With-Profits has been mis-sold, allowing Insurance Companies and their sales people to present With-Profits as something it is not (not all IFA’s are wholly innocent either). With-Profits has undoubtedly regularly been sold as a direct alternative to deposit accounts.

There remains somewhere in the region of £300 billion invested in With-Profits, many are trapped by redemption penalties (often called, MVR’s, MVA’s etc.) but the funds themselves continue to deliver appalling results.

However, a small minority of providers  (Step forward – Prudential, Aviva, LV= and Wesleyan) have achieved positive and very acceptable results for their plan holders. These companies aren’t rocket scientists, they simply applied the original principles and benefits of with-profits, not chasing market trends and fashions, and investors with these companies are likely to be pleased with the results. Although there are another few companies who have achieved, at best, reasonable returns, somewhere in the region of 40% of all With-Profits investors are in funds that are doomed to underperform substantially in the future.

One of the many contradictions for With-Profit investors is that those in good plans with good companies, achieving good results, are likely to be in a position where redemption penalties (MVR’s, MVA’s, or some other element of the With-Profiits alphabet soup) do not apply, and they can move out of the fund quite easily. Sadly, this is another opportunity for the unscrupulous sales person to lump all With-profits funds under the same umbrella. In a nutshell, the poor funds usually have the highest penalties, the good funds often have no (or very low) penalties.

Yet another contradiction is that the good funds, with the best results, are usually those that have the highest asset allocations in shares and property which, ironically, makes them more vulnerable to market downturns and less suitable for the cautious investor that they are aimed at. Help !

If you have a With-Profits based investment, or are considering investing in one, take advice now and of course I will be pleased to help.

The reality is these investments are often not what they seem and there are a lot of lazy Financial Advisers out there that continue to use what in the modern world is clearly a little out of date.

Over here I pride myself on making sure that all investments fit completely with your overall Risk Profile and use an Independent System (that has been tested) in order to ensure my recommendations fit.

Richard Smith

0845 226 9106

You can contact me here

Related Links are below.

Abbey Life – Poor Pension Providers

Poor Pension Providers – Free Review

With Profits – Investment Advisers

Tags: Abbey Life Pension, Investments, Pearl Assurance, Pension Transfers, Scottish Provident, With Profit Investments
Posted in Equitable Life, General Financial News, Investments, Pearl Pension | Comments Off

Finance Zone | Stock Market Commentary

Richard Smith – The Finance Zone – Market Commentary – September 2009

Equity markets have rallied sharply since early July, during what is usually a quiet time of year (whatever happened to “sell in May and go away”?), encouraged by a better than expected earnings on both sides of the Atlantic and by signs that most developed economies were emerging from recession. The rallies continued to be confined mostly to the “up and down” sectors which had both plunged and bounced fastest in the past year, financials, mining stocks and industrials. More recently, however some of the more defensive sectors have also joined the party.

Central banks have been at pains to say that monetary policy will not be tightened prematurely, which, given their role as guardians against inflation, underlines the strong desire to avoid repeating last winter’s brush with the risk of a full blown economic depression. They have also emphasised the many risks to the recovery. These include too much personal debt, too little bank capital and too much public borrowing. Central bankers clearly believe that domestic inflation pressures will remain contained by the spare capacity created by the recession. It is less certain whether the same applies for imported inflation, since commodity prices may be more sensitive to the rapid growth rates in emerging economies and therefore accelerate before growth is buoyant in developed economies. There could come a time when inflation from this source forces tighter policy in developed economies while they still have spare capacity, one of the downsides of globalization.

Although there are risks to the steepness and persistency of the recovery, central bankers appear set to continue to fund the overall strategy until it is clear that the recovery in confidence is sustainable. Given that there is still a significant lack of certainty over the outlook, it is fair to ask if equity markets are too easy-going in their “everything back to normal” approach. At the very least, greater care will be needed, now that the bargain basement prices have all been mopped up.

EQUITY MARKETS

United Kingdom

The UK has been slower to recover from the steeper than expected fall in output last year and early this. This has prompted the Bank of England to extend its quantitative easing policy, in turn meaning that they take a more cautious view of the recovery than the equity markets. Partly this is due to the equity market expecting recovery in 2010, and pricing that in in advance. The markets clearly expect that the reflationary policies put in place by the Bank of England will work. A revival in hopes for global growth have been reflected by forecasts for the UK, albeit slightly later for UK plc, which expect a turnaround from this year’s fall to a modest, but improving, growth rate in 2010.

The spectre at the feast remains the enormous gap in public finances which even politicians have had to acknowledge as they furiously attempt to defer difficult decisions until after the election. The markets must have their confidence maintained in the government’s commitment to sustainable fiscal policies or they will stop making money available to fund the recovery. That is forcing all parties to admit that significant cuts in public spending, and tax rises, will be needed to close the fiscal gap in a reasonable timeframe. The ratings agencies have warned that the UK will put its AAA status at risk if it does not announce significant public spending cuts in the pre-Budget report. Economic recovery and the natural ending of fiscal easing measures will not alone be sufficient to stabilise and reduce public debt burdens over the medium-term.

Given the inevitability of such fiscal policy tightening at a time when consumers are also trying to reduce personal debt and rebuild savings, the UK seems likely to be less buoyant than the global economy generally. The current competiveness of Sterling should help the usual sectors able to take advantage of this (exporters, tourism etc.).

USA

The US economy is responding to the mind-bogglingly enormous fiscal and monetary stimulus put in place over the past year. This has been helped by the fact that parts of the economy, in particular housing and the motor industry, have effectively been in recession since 2006 and may have reached the absolute low point of the cycle. Like in the UK, the absence of any real controlling process for managing ongoing budgets is likely to cause problems to investors as the economy recovers. The US political system remains open to lobbying and shows little inherent commitment to fiscal restraint, in fairness this is fully representative of US consumers, who seem to believe that the new president is installing a communist state ! The emphasis, and the easier “sell” from the Democrat-dominated Congress, remains focused on increasing spending.

The financial system appears to be rapidly weaning itself off the special support measures put in place last year, with the main remaining vulnerability being to real estate lending. This suggests that the special measures and low interest rates will remain in place for some time yet. The signs of the housing market turning up are important and, as in the UK, have the potential to be confidence inducing and self-fulfilling, as those who have waited to buy now see the market near its bottom and banks can afford to be more patient with borrowers in difficulty. Although the remaining consumer debt overhang remains a similar barrier to the UK’s problem, recovering house prices would enable savings to be rebuilt and allow a faster rate of economic growth while this was maintained.

Europe

Some European economies including, most importantly, France and Germany emerged from recession in the early summer, while others, in particular Spain and Ireland have remained weak. It is notable that both Spain and Ireland were effectively economic “one-trick ponies”, with both economies built primarily on property development and the finance thereof. There remains some concern that job losses in France and Germany have been delayed by their relatively inflexible labour laws and possibly also by the imminent German election. Rising unemployment could therefore be more of a drag on growth and output in 2010 than in countries where employment responded more rapidly to the downturn and where the worst might soon be over. If recovery arrives more rapidly in the exporting economies, such as Germany, than those that are struggling to remain competitive, such as Italy, or those whose economies grew on a financial bubble, such as Spain and Ireland, there could be renewed significant strains on the Euro. The most likely outcome of such strains is probably even greater fiscal and monetary easing rather than the end of the Euro.

Japan

The Japanese economy has begun to recover from the absolute cliff-fall in output last winter, which wiped out 25 years of output growth. The popular discontent with this crash which, let us not forget, came after nearly 20 years of stagnation, led to a political sea-change, with the opposition DPJ winning by a landslide and ending 51 years of almost exclusively one-party LDP rule. Markets are still unsure what to make of this. The new government’s policies are determinedly reflationary and are focused on reviving the domestic economy rather than targeting and relying on export growth. If they can pull this plan off, whilst still addressing the enormous legacy high-debt and high-deficit public finances, the prospects would be bullish for Japanese equities. The key issue is whether their policies can actually revive growth, which in turn would make the fiscal tightening more acceptable and politically feasible or whether they are forced by a lack on international confidence to tighten first, in which case the recovery could fail to start, yet again.

Far East Ex Japan / Emerging Markets

Emerging markets have contributed their positive growth this year, as developed economies have shrunk and, not surprisingly, they seem set to contribute the majority of recovery in 2010. In that respect, decoupling has taken place to some extent, as they have moved on being dependent on the prosperity of western markets to taking on an increasing role in actually driving the global economy. In addition to generally having a younger workforce, confidence has been boosted by general improvements in corporate governance, which has helped to attract inward investment from more conservative investors. The Asian crisis of the 1990’s led to more conservative financial policies, so emerging markets are much less dependent on foreign capital than they were before and in some cases, the dependence has actually reversed. They (in particular China) have the assets and it is the G7 countries that have the debts. The transfer of economic power from the West to the East appears increasingly inevitable.

Bonds

The last few months have seen gilt prices being pulled in opposite directions. On one hand, prices have fallen when investors have focused on the strength of the economic data suggesting that recovery will occur earlier than previously expected. On the other hand, prices have risen over the past month as investors are once again reviewing the possibility of deflation occurring over the next few years, which would clearly benefit fixed interest products. To cloud the issue further, the Monetary Policy Committee recently extended their programme of purchasing government bonds, which in turn boosted the gilt market. The money market’s perception of risk has declined substantially since earlier this year. The yield spread between 3 month LIBOR (the rate at which banks lend to each other) and Bank of England base rate has fallen back to the levels recorded before the financial crisis (about 0.15%). At the height of the financial crisis in September 2008, banks were afraid to lend to one another, fearing bank failures, and the spread widened to nearly 2%.

The performance of corporate bonds has been lively since their low point earlier in the year. In March 2009 the average difference between the returns on bond and gilts was at its widest point for eighty years at 4.4% p.a. This difference has now narrowed to 2.2%, effectively providing a total return from corporate bonds of more than 20% in 6 months. Because of this clearly corporate bonds no longer offer such exceptional value although the yields on offer are still relatively attractive when compared to those available prior to the financial crisis.

Commercial Property

UK commercial property is about to become very attractive to foreign buyers, if it isn’t already. Real values have fallen by up to 50% in some cases and the pound by nearly 30%. Norway’s sovereign wealth fund has stated its intention to invest in UK property as has the US fund manager LaSalle investment, the Australia Future Fund (who recently spent £210m on 1/3 of the Bullring shopping centre in Birmingham). These investors alone will have the potential to arrest the fall in the commercial property markets but, in addition, the major UK house-builders and property developers are looking to raise big money through the stock market in the next few months to ensure they are ready to benefit from any upturn. Although there are still major obstacles for the sector to overcome, not least the shortage of affordable finance, the sector looks sensibly priced at least.

CONCLUSION

Investors correctly understand that, over the long run, equities have delivered, and should continue to deliver, superior returns to those generated by any other asset class. They also appreciate that these returns come with much higher levels of uncertainty in any given period. During the unprecedented period we have just experienced, it is not surprising that inexperienced investors bailed out until “things settled down”. Have they “settled down” now ?

The answer is No. Things never “settle down”. The investment environment remains difficult for investors, because that is the nature of the beast. The key factor is not to have all your eggs in one basket (that inevitably lead to “bubbles”) regardless of what the experts say, and to take a long term view.

Things may well look better now than they did 6 months ago (what wouldn’t !) but in the same way that investors should not be tempted to sell what they wish they had sold a year ago, they should not be looking to buy now what they wish they had bought six months ago.

Tags: Investing, With Profit Bonds, With Profit Investments
Posted in General Financial News, Investments, News - Updates | Comments Off

Pension and Investment Planning Advice | Copthorne Crawley and East Grinstead

At last the UK Government (via  the Treasury) has started to indicate that something is up and they may be looking to raise money in other ways. Possibly because the rates offered from the City are looking to be a little on the high side.

Now before I get a million emails outlining the error of my ways please see  article below.

So we finally have some good news on the horizon for Savers, however the Headline 50% increase is unlikely to make a massive difference. However if you remember when Northern Rock first went down. There was a clamour for stable and safe and of course National Savings is one of the safest places to be.

However as the markets have changed and everyone is feeling a little better about the banks money is starting to flow away from the Treasury (National Savings) and go elsewhere.

The reaction is therefore to increase the rate offered and this should stop the flow.

Personally I have always liked National Savings and one medium to consider, and with an increase in the overall rate offered on Premium Bonds and some more to follow I am sure. Make sure you don’t ignore any of the National Savings Products when looking around for safe home.

When considering any kind of Investment it is important that you take advice. If not from ourselves then from your usual adviser.

Richard Smith

Http://www.thefinancezone.co.uk

Posted in General Financial News, Investments | Comments Off

The Finance Zone | Pensions | Inheritance Tax | Investment Funds

Interesting month this looks likely to be. September often is. People are beginning to talk about a Double Dip recession as if it could be a possibility. Maybe they are right.

It will certainly upset most of the Estate Agents in the UK.

So what is my focus over the coming months.

Firstly Poor Performing Pensions with providers like Abbey Life, Scottish Provident and Allied Dunbar to name a few, there is more information in here in these links

Abbey Life Pensions

Other Pension Providers

Free Pension Review

On another point relating to Abbey Life Pensions, if you are approaching retirement some of the Policy Conditions are not that helpful so you should seek advice as a matter of priority.

Other matters include reviewing the fund choice of your Pension and Investment Plans to included ISA’s and Unit Trust Investments.  In simple terms if you have not reviewed yours over the past few years September/October looks like it will be in your best months of the year so far.

Given we are facing further uncertainty you should be focusing on your overall spending,  and giving your Budget a tweak in anticipation of Christmas which of course is not far away.

Wills are Estate Planning are always topical and you should consider updating/revising or amending yours. Inheritance Tax is one of the few that can be safely avoided.

Thank you for dropping by, please let me have any questions you have by using the form on this page.

I look forward to hearing from you.

Richard Smith

0845 226 9106

Posted in Abbey Life, General Financial News, Investments, News - Updates | Comments Off

Abbey Life Pension Holders | April Deadline Looms |

For Abbey Life Pension holders the date of the 6^th
April 2010 has even more significance as the minimum age you can draw your Pension is increasing.

I have already covered many of the issues in relation to Abbey and a few other providers here Abbey Life Pension.

The Pension Age is increasing with effect from April of next year 2010 which means that you could be locked into a Poor Performing/High Charging Pension for a lot longer, unless of course you start to consider your options beforehand.

The reality of the situation is this:-

If you act soon you could be drawing benefits before age 55.

You could be looking at owning a Low Charging, Better Performing Pension Plan rather than the poor value Abbey Life
Pension (there are others).

You will have a good deal more flexibility with a more modern Pension Contract.

The action you need to take is to call on 0845 226 9106 – ask for Richard Smith – the Abbey Life Pensions expert who is also an
Independent Financial Adviser and I will give you some further guidance.

Please don’t leave it until April!

Richard Smith

0845  226 9106

Related Links

A list of Poor Performing Pension Contracts (Abbey Life Pensions, Scottish
Provident Pensions, Scottish Mutual Pensions)

Pension Alternatives (Property as as a Pension Services)

High Charging Pensions (e.g Allied Dunbar Pensions, Abbey
Life, Self Invested Pensions)

Posted in Abbey Life, General Financial News, News - Updates, Pensions - News | Comments Off

EU Rebate – Farce

Something you might want to take up with your MP over the coming few months is the issue of the reduction of our E U Contribution Rebate which is said to be worth at least £257 per British Household.

You may remember this, part agreed because of the Common Agricultural Policy (CAP) as it was argued that as we in the UK have a far smaller Farming Base than the rest of Europe, given up in part by Mr Blair – looks like his job will be safe in Europe! And now it seems the final part is being given up by Mr Brown as his Swansong.

You may wonder why  I am commenting on this here, well we  are seeing increasing levels of taxation from all angles, and this extra will have to be funded from somewhere and no one has any idea how this additional, substantial amount is going to be funded.

Drop a line to you MP see what that have to say.

Richard Smith

http://www.thefinancezone.co.uk

Posted in General Financial News | Comments Off

The Finance Zone | Council of Mortgage Lenders

Tags: Mortgage Advice, Mortgage Planning, Mortgages Advice in Copthorne Crawley and East Grinstead
Posted in General Financial News, Home Buyers, Mortgage Arrears | Comments Off

The Finance Zone | Right Move Say What?

So there you have it, everything seems to be on the UP.

Richard Smith

http://www.house-buying-guide.co.uk the incisive guide to making the right decisions

Tags: House Buying, Property, Property Prices
Posted in General Financial News, Home Buyers, Mortgage Arrears | Comments Off